UP TO £80m extra a year will be pumped into rebuilding some of Merseyside's poorest areas, under a £1.3bn spending spree for housing.

UP TO #80m extra a year will be pumped into rebuilding some of Merseyside's poorest areas, under a #1.3bn spending spree for housing.

John Prescott announced a trebling of government funding by 2008 for the flagship Pathfinder project to bulldoze or refurbish derelict and abandoned homes.

The Merseyside scheme, covering struggling parts of Liverpool, Wirral and Sefton, has already been awarded #86m by the Deputy Prime Minister over three years up to 2006.

Now #450m a year will be up for grabs by 2008, with Merseyside - one of nine Pathfinders across England - expected to receive a share worth up to #80m a year.

Mr Prescott told MPs yesterday: "These market renewal pathfinders aim to create vibrant and attractive communities, where people want to live, not want to leave." The first three-year phase of the Merseyside scheme, called New Heartlands, is targeting Anfield, Breckfield, Kensington, Bootle and Birkenhead.

With extra funding from the private sector, more than 2,700 derelict and poor-quality homes will be demolished and 1,600 affordable new ones built.

A wider programme, to revive the housing market, has been drawn up with developers, banks, building societies, the health authority and the regional development agency.

Ministers have been alarmed by the near-collapse of the housing market, with some properties almost worthless and some streets abandoned altogether.

The government has already pledged that owners of homes that have to be demolished will be given compensation of at least #2,600.

Pauline Davis, managing director of New Heartlands, said: "This represents a long-term government commitment which is essential if we are to build on our success, restructure the housing market on Merseyside and create neighbourhoods for the future."

The Neighbourhood Renewal Fund, which targets the 88 poorest local authority wards in England, including many in Merseyside, will receive an extra #525m.

But Bernard Jenkin, Tory regions spokesman, said: "Having presided over a 40% slump in social house building and a 27% increase in homelessness, John Prescott now expects plaudits for trying to unravel some of the damage he has done."